Going Overseas?If you are thinking of going (or already are) overseas and you have rented property in the UK then the Non-Resident Landlords Scheme requires your letting agent (or tenant if you do not use an agent) to deduct Basic Rate Tax from any rent over £100 per week.
Letting agents and/or tenants don't have to deduct tax if the Inland Revenue tells them not to. The Inland Revenue will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied for approval to receive rents with no tax deducted. Even though the rent may be paid without deducting tax, it does remain liable to UK tax so you have to include rents received on any tax return. All letting agents also have to complete an annual return for all non-resident landlords.
If your tax affairs are up to date, non-resident landlords can apply to the Inland Revenue to receive their income from rental property gross, ie, without basic rate tax having been deducted. Although other income may not be taxable in the UK, rental income from UK properties will still be subject to tax in the UK. Personal allowances may however be available to cover some or all of the net rental income. Obviously, receiving your income without tax deducted provides you with a considerable cash flow benefit, as you will not have to pay your tax until the end of the financial year. Please note that this certificate does not grant you an exemption from tax, but approval to deal with your own assessment.
If the exemption certificate has not been issued then the lettings agent is obliged to withhold tax at the standard rate and must pay these funds to the Inland Revenue on a quarterly basis. Your managing agent will normally do the accounting for you, deducting and withholding tax at the current basic rate from net rent after allowable expenses. If the tax payments you make end up being greater than your liability (for instance, if there are deductible expenses which are not immediately accounted for) you may claim them back at the end of the year. It will be your responsibility to liase with the Inland Revenue to arrange this and not the responsibility of your managing agent.
To apply for approval to receive rents with no tax deducted click here to download the complete NRL1 and here for guidance notes on how to complete the form. Of course if we are managing the property for you then we will help you complete these forms.
If you are already abroad or are thinking of going abroad then we would strongly recommend that you use our Full Management service. Our use of the internet and email makes contacting you abroad so much simpler. An email will not wake you at 4am nor will you be calling our office at midnight and not getting a reply. We treat emails as "written telephone calls" and when received on a working day we acknowledge them by return. Wherever possible we aim to reply to any query on the same working day. We realise how important communication is to you when you are far away. Click here for our contact details and register your property with us today.